Green growth has been a strategic pillar of the OECD’s work since 2009, when OECD member countries mandated the organisation to develop a Green Growth Strategy. Green growth has entered almost all areas of work across the OECD, including the Directorate for Public Governance and Territorial Development. The directorate’s mission is to help governments at all levels design and implement strategic, evidencebased and innovative policies to strengthen public governance; respond effectively to diverse and disruptive economic, social and environmental challenges; and deliver on governments’ commitments to their citizens.

Pursuing green growth in cities is more important than ever in light of the explosive urban growth expected over the coming decades. Today, for the first time in human history, over half of the world’s population lives in urban areas. By the end of the century, this share is projected to rise to around 85%, out of a world population of about 10 billion. This implies there will be 5 billion new urban dwellers to accommodate in the years ahead.

Chapter 1 starts by defining urban green growth. It provides an overview of the main drivers of urban growth and the urban activities that can reduce impact on the environment. It presents four main policy instruments that urban policy makers can use to foster green growth and discusses the factors that may affect their policy choices and scope of action, including national policies. Finally, six policy scenarios illustrate the potential impact of green growth policies on the economy.

Chapter 2 provides evidence for the important role cities play in both national growth and environmental performance. While cities can generate the positive effects of agglomeration economies, such as higher income and productivity levels, they are also vulnerable to negative agglomeration effects such as congestion, pollution and pressure on natural assets. This chapter underlines the strong link between cities’ environmental performance and urban form and demonstrates how cities can lower the abatement costs of national environmental policy targets, notably through transportation and land-use policies. This points to the key challenge of greening urban infrastructure, within the context of lagging global investment in infrastructure.

The OECD has conducted four green city case studies (Paris, Chicago, Stockholm and Kitakyushu). These consider the potential impacts of urban green growth policies on i) jobs; ii) urban attractiveness; iii) local production of green goods and services; and iv) the value of urban land. While the small number of case studies and limited data are not sufficient to provide extensive evidence of the impact of urban green growth activities on the above goals, the case studies do offer preliminary insights into the types of policies that are most likely to contribute to each goal in urban sectors such as land use, transportation, the built environment, energy and waste. The chapter highlights examples of these policies and strategies to overcome obstacles in implementation.

This chapter assesses the main governance and financing challenges in implementing green growth in cities. Multilevel governance – co-ordination across sectors and among different levels of government, private sector and civil society – is an important tool for integrating environmental and economic priorities into urban activities. This chapter proposes a framework for addressing potential gaps in co-ordination and suggests ways in which national governments can enable green growth in cities. This is followed by a discussion of the opportunities for increasing funding for urban green growth, which include aligning local revenue sources (including taxes, fees and charges) with green growth priorities. It will also be essential to mobilise private finance for green infrastructure investments, through mechanisms such as public-private partnerships, development charges, loans, bonds and carbon finance.